Bargain hunters returned to the S&P/ASX 200, sending the index 0.5 per cent or 24 points higher to 5137.2. The All Ordinaries climbed 0.5 per cent or 23 points higher to 5216.2.

It followed a positive day around the Asian region, with Japan's Nikkei among the strongest bourses, posting a 2.2 per cent gain in late trade after falling almost 8 per cent on Friday.

Contrary to the indiscriminate selling that wiped $50 billion off the benchmark index on Friday after the referendum vote resulted in favour of Britain exiting the European Union, investors homed in on directly affected stocks, Watermark Funds Management analyst Omkar Joshi said.

"It's very stock specific. It's not an across the board sell off in contrast to Friday, it's more measured and controlled," he said.

While most sectors ended higher, the financial sector was where investors most wielded the axe.

Fund manager Henderson Group, the day's worst performing stock, fell 15.9 per cent to $3.75 and BT Investment Management fell 10.2 per cent to $7.82.

"Brexit effectively means not only [these companies] have had a lot of hesitation in flows coming in the last quarter, going forward there's also going to be weaker fund flows," Mr Joshi said.

Clydesdale Bank, National Australia Bank's British spin-off, fell 9.4 per cent to $4.14.

QBE shares also took a hit, down 6.8 per cent to $10.23 despite the bank assuring investors it did not "anticipate any material impact on our day to day insurance operations".

Mr Joshi said the market was pricing in the immediate impact from the currency markets on fund flows, and said there could be more downside for specific British and European-exposed financial stocks once the next level effects of the Brexit are considered.

The big banks were mixed. ANZ Banking Group lost 0.7 per cent to $23.27, National Australia Bank fell 0.4 per cent to $24.51, while Commonwealth Bank of Australia rose 0.3 per cent to $72.80 and Westpac Banking Corporation ended 0.1 per cent higher at $28.38.

Michael Price, AMP Capital head of fundamental equities, said that a lower global growth and bond yield environment could lead to a resurgence in the yield trade. Australian shares have long been feted for their relatively high yield.

But it was unclear whether Australia would be regarded by investors as a safe yield-haven or a vulnerable economy, he said.

"The Australian market has rallied for three years without earnings growth and could be considered expensive and vulnerable to a loss of global confidence," he said.

The weakest sector was information technology, down 2.1 per cent, heavily weighted by Computershare, which fell 6.6 per cent to $9.24 on its British exposure.

The big miners were the among the strongest performers among the blue chips, albeit recouping just some of the heavy losses suffered on Friday.

BHP Billiton was the strongest stock by weight, rising 3.1 per cent to $18.08, while Rio Tinto rose 2.9 per cent to $44.07. Fortescue Metals Group was the day's best performer, up 8 per cent to $3.53.

The top performing stocks included 'safer' or defensive picks including Telstra, which rose 2.2 per cent to $5.47, Transurban adding 2.7 per cent to $11.91 and, CSL, up 1.9 per cent to $108.82.

In the retailers, Woolworths rose 0.6 per cent to $20.68 and Wesfarmers eased 0.1 per cent to $39.21.

Telstra pulled the telecommunications sector to the best performer of the day, rising 2.2 per cent, followed by utilities up 2.1 per cent.